Archive for the ‘Manufacturing’ Category

Neungna 88 [Rungra 88], Trading Company, located in Suncheon, South Pyongan Province, has been a popular workplace for women, offering jobs in clothes manufacturing. It is one of the companies tasked with earning foreign currency for the North, but recently, with the wages standing at a mere 10th of individually employed workers, more people are leaving their posts, the Daily NK has learned.

“Workers employed by breweries or bakeries receive roughly 200,000 KPW a month,” a source in South Pyongan Province reported to Daily NK on Tuesday. “But at Neungna 88, workers on the clothing line only make 20,000 KPW even though they work in unsatisfactory environments.”

The trade company falls under the Chosun Workers’ Party’s Finance and Accounting Department and exports to China everything from coal and iron ore to medicine, alcohol, clothing, and health supplements, earning back foreign currency. The profits are offered up to the Department or are used to procure holiday gifts for Party cadres under Kim Jong Eun’s name.

Neungna 88 in Suncheon is a branch of the headquarters in Pyongyang, and focuses on exporting clothes in collaboration with China, meaning the company brings in the yarn, fabric, and designs from China, and then exports the final products back. It also runs a restaurant serving pizza to procure additional funds. Increasing foreign food availability is the latest method employed by these foreign-currency organizations to encourage resident spending, encouraged by the increased demand. For foreign currency-earning enterprises to extend their activities domestically is indicative of the increasing purchasing power of the middle-class.

“If you get to Daedong River in Sunchon, you’ll see a big sign on a three-story building that reads Neungna 88 Trading Company,” the source explained. “The first floor is a pizza place, and on the second and third stories, there are some 150 women making clothes.”

Their monthly wages are 20,000 KPW [2.3 USD], which is almost seven times higher than other state-run companies, but the lowest among trading companies.There are no standards as to how much these trading companies have to pay their employees, and each company decides based on the profits and amount of work allocated.

Unlike men, it is very rare for women in their teens or 20s to work for a trading company. Despite this fact, some women work on garment manufacturing lines because of the regular food rations and extra benefits offered on national holidays, regardless of the low wages.

However, recently more people have been quitting their jobs, as those who are hired by private businesses are able to receive up to a ten-fold increase in wages and work in a more pleasant environment, the source explained. This portends a growing number of women who are seeking more than a low wage with rations and instead looking for better employment opportunities.

With this trend, the company has been trying to hire more women with experience at state-run apparel factories, but not many are willing to due to the low salary. “Because of this, unless Neungna 88 raises its wages it will create obstacles for exports, not only due to technical difficulties, but also low morale,” she concluded.

North Korean textile exports to China are expected to surge four-fold to US$800 million this year compared to 2010, indicating a declining dependence on raw materials exports to earn foreign cash, a report said Tuesday.

The report by Korea International Trade Association (KITA)’s Beijing office showed shipments of textiles reached $410 million in the January-July period, up from just $190 million in 2010.

The international traders’ organization said textiles also accounted for 26.3 percent of all North Korean exports to China, up more than 10 percentage points from 16 percent reached four years earlier.

“Export growth reached 40 percent coming into this year, so it should not be too difficult to surpass the $800 million mark,” KITA said.

It said growth is being fueled primarily by the lower wages of North Korean workers compared to their Chinese counterparts.

On average, a North Korean worker earns $244 per month compared to $440 for a Chinese worker employed in Jilin province north of the border.

KITA said that, starting last year, some Chinese companies began shipping materials to North Korea to be made into finished products there.

In contrast, exports of raw materials, which made up 71.4 percent of all commodities shipped by North Korea to China in 2011, dropped to 60.7 percent of total exports in the January-July period. Trade data showed sharp drops in exports of coal, iron ore and pig iron.

The trade agency then said that with Chinese labor costs expected to rise steadily and the country suffering from a shortage of workers in certain sectors, North Korea may be able to capitalize on its advantage to build up its labor intensive sector.

You can read the whole story here:
N.Korean textile exports to China surge in 2014Yonhap
2014-9-23

It appears that some factories and department stores in North Korea have begun to implement a delivery service in response to customer demand. This new customer-oriented service seems to have arisen out of the Kim Jong Un regime’s goal of increasing autonomy and competition among businesses.

According to the newest issue of “Choguk” [Joguk] (“Motherland”, September 2014), a media outlet associated with the General Association of Korean Residents in Japan, North Korea’s representative state-run department store Pyongyang Department Store No. 1 has been making efforts to diversify the services offered to its customers. The article specifically revealed a personal delivery service, saying, “Salespersons have responded to the public’s requests and have begun to deliver ordered products to sell directly to customers at their doorsteps.”

Salespersons from Pyongyang Department Store No. 1 have also been travelling to power plants, mining sites, textile mills, farms and other worksites to sell products directly to workers and farmers. Other businesses, such as the Potong River Shoe Factory, have also been diversifying customer services. For example, employees now visit customers’ homes to measure shoe size and satisfy other requests they may have when placing an order for shoes.

The Daedong River Passenger Transport Company in Pyongyang is currently offering a taxi dispatching service to customers who call in and request a pickup. Similar to the workings of South Korea’s taxi service, North Koreans may simply dial “186” to be connected to the closest dispatch office, which then sends out a taxi to pick up the customer.

On the other hand, North Korea has recognized the problem of the low-quality products and poor construction work and has emphasized that efforts must be made to remedy these areas. In the most recent issue of the quarterly academic journal, Kyongje Yongu [Economic Research] (2014, Issue 3), one article points out problems in the poor quality of North Korean-made products and construction, saying, “Neglect in quality growth is an outdated attitude.”

Currently, North Korea has undertaken large-scale construction operations to finish the Kim Chaek University of Technology’s faculty apartments, the Pyongyang Orphanage and Nursery, the North Pyongan Chongchon River Power Plant and other projects spanning various fields. The goal is to complete these projects concurrently with the anniversary of the foundation of the Worker’s Party of Korea (October 10).

The article also points out, “Despite attempting to work toward self-sustainability, there are events where lower quality, alternative products are being used below the material requirements that are leading to lowered quality work.” Furthermore, the article emphasizes, “Production and circulation of faulty products or products which cause harm to the health or lifestyle of the people must be stopped.”

It has also been reported that corruption is taking place at factories and construction sites, with party officials or intermediary managers amassing riches by siphoning off materials and pocketing the money. This leads to further problems in product quality and defectiveness.

Due to the issues of poor construction and product quality, the article points out, “There are many areas in our material economic life that fall behind the global trend,” but “if the quality of products and buildings are improved, the need to consider products from other countries will wane.”

In order to solve these problems, the article suggests implementing product standardization and specialization and encourages research in industrial design.

The Bureau of Food Safety of the Ministry of Health on Wednesday decided to take Angunguhwanghwan (안궁우황환), a functional food produced by North Korea, off the market. It will also destroy all of the products, which contained high concentrations of mercury, arsenic and lead.

Test results of this product revealed that it contained mercury and arsenic exceeding the allowed limits. The Central Institute of Drug Testing collected the samples from the LC Tacy Red Ginseng Showroom in Hanoi.

The bureau has asked the firm to stop circulation, revoke and destroy the Angunguhwanghwan product and report the results to the department before August 29.

The product, produced by the Korea General Mannyon Health Corporation Chongryu No2, North Korea, was imported by Mannyon Vietnam. The product was licensed by the Bureau of Food Safety in July 2013.

As reported by the importer, it imported 30 boxes of this product in June 2014, with the purpose of introducing it to the local market. Four of the boxes were tested.

Here is a photo of the product:

Read the full story here:
N. Korean functional-food item taken off marketVietnamnet Bridge
Le Ha
2014-8-29

Due to the strengthening of capitalism and competition in North Korean society, it appears that the status of consumers has risen considerably.

In the North Korean economy — which has clung to a supply-oriented, planned economic model — it is extremely rare to see production change in response to consumer demands and preferences.

The Rodong Sinmun, the official newspaper of the Central Committee of the Workers’ Party of Korea, published an editorial on August 3, 2014, calling for the “Brisk Opening of the August Third Consumer Goods Production Movement.” This editorial encourages the public by assuring that the consumer products will be made according to the needs and demands of the people.

“A socialist society cannot think about the production of consumer goods that are above the reaches of the people,” the editorial emphasizes, and that “the peoples’ demands and interests are [the Party’s] absolute top priority, and it is the noble duty of the Party to create these desired consumer goods for the people to enjoy.”

Through the use of various media, North Korea has propagandized the “consumer-focused” policy, claiming to have spurred competition and the increase in quality of products and services throughout the nation.

Joguk (Motherland), a media outlet of the pro-North Korean General Association of Korean Residents in Japan, published an article in their August 2014 issue entitled, “The Standard of Competition Is Determined by the People.” The article emphasizes production tailored to consumer demands, saying that “Product evaluation is something which can be done only by those who demand and directly use the product; it can only be done by the general public.”

The article further states that “Products popular among the general public and used by the masses are evaluated accordingly for their high quality.” It also mentions the cosmetic brands “Eunhasu” and “Pomhyanggi” as examples.

In a July 30, 2014 article, the Choson Sinbo introduced the Potong River Shoe Factory, which is responsible for the production of popular products such as the so-called “kill heel” high-heeled shoes, wedge-heeled shoes, and pointed stilettos. By working together with a department store and periodically reviewing customers’ feedback, the Potong River Shoe Factory can produce shoes to cater to shoppers’ preferences.

This method of setting the focus on consumer evaluation can also be found in North Korea’s education system.

On August 7, 2014, the Rodong Sinmun introduced the “bottom-up evaluation” system at Kim Jong Suk Middle School. This process, touted as one of the successes of educational reform, allows students to evaluate their teachers once per semester. By creating competition among educators, this system is expected to have effects all across the nation.

These types of changes are said to have close relations to the Kim Jong Un regime’s policy focusing on light industry, which also accounts for the improvement of standards of living for the people.

It appears that unlike the heavy chemical industry previously emphasized by the Kim Il Sung and Kim Jong Il regimes, light industry must consider not only production amounts, but the quality of the products as well. This inevitably leads to the emphasis being put on consumer product reviews.

Through consumer reviews, competition arises and productivity is increased, leading to the production of consumer goods with higher added value. Despite being called a “Socialist Competition,” in reality this system may not be so different from capitalism.

The meaning of August 3rd has changed since the creation of the 8.3 Movement in the 1980s, taking on connotations of areas of previously unavailable liberty, at least in the workplace.

“The term ‘8.3’ used to just mean products that were not manufactured in factories,” a source in North Pyongan Province told Daily NK on August 4th. “Say it now, though, and a lot of people will interpret it as a sign of market influence.”

The 8.3 Movement was a state-led attempt to increase provision of consumer goods by having factories and enterprises source their own inputs, and production facilities produce commodities beyond the remit of central planners. The movement was named after the date Kim Jong Il ordered it, August 3rd, and goods manufactured under its rubric came to be known as “8.3 consumer goods.”

Consumers could not purchase 8.3 consumer goods in subsidised state shops; rather, they were sold directly at market prices. As the movement grew in scale and state-run enterprises pushed to increase productivity, so 8.3 Workers and even 8.3 Work Units were formed.

As factory production slumped in the 1990s, a situation that persisted into the 2000s, workers took to dodging their work duties and mass mobilization orders so as to engage in cottage industries: making their own goods to sell. A portion of their income went back to the state, a de facto tax, and this became known as 8.3 Money.

“As recently as a few years ago, the 8.3 Work Unit in a cement factory in South Pyongan Province would produce roof tiles and slates and sell them to construction firms at market prices,” the source said. “But now, doing private business to make 8.3 Money is getting to be more popular than working in the designated 8.3 Work Unit.”

According to the source, payments of 8.3 Money can be as little as 20,000 KPW per calendar month all the way up to 200,000 KPW, the equivalent of paying for 40kg of rice in a public market.

“8.3 Money sucks up about 5-10% of the earnings of a person working that way,” the source explained. “This means they could be earning up to 2,000,000 KPW per month.” People in this upper earnings bracket do things like trade bicycles or motorcycles, or sell hand-crafted furniture, she said.

Even organs of citizen control and regulation are influenced by 8.3 Money. The Korean Democratic Women’s Union [KDWU] is one such example. An organization dealing with family matters, the organization technically demands that all women over 30 be members; however, participation can be waived in exchange for a share of 8.3 Money.

“There are three tiers of 8.3 money contributors, dependent on their financial capabilities,” the source explained. “The ones that have complete freedom and are exempt from all duties pay the most. Then there are some who only participate in monthly studies and others who are only exempt from mobilization.”

This complete freedom comes at a price ranging from 240,000-480,000 KPW per quarter, but is seen as a worthwhile outlay. In effect, 8.3 Money marks out a certain type of class stratification.

“Workers who pay a lot of 8.3 money receive protection from [the Party] despite skipping mandatory self-criticism meetings. Those who don’t pay much have to attend all study sessions and mandatory meetings,” the source said.

“Factories are in competition to get the greatest amount of funds possible from workers, but workers want to move to factories where they have to pay the least 8.3 Money,” he added.

A North Korean friend once told me an 8.3 joke. If someone was “low-quality” they were personally referred to as “August 3rd” person. I wonder if 8.3 goods are still perceived as low-quality.

Read the full story here:
Culture of August 3rd Changing with the TimesDaily NK
Seol Song Ah
2014-8-5

It appears that the Kim Jong Un regime’s core slogan of “constructing a powerful knowledge economy nation” is being propelled by the development of high-tech development zones.

The need to switch to a knowledge economy is emphasized in the newest issue of the quarterly North Korean academic journal Kyongje Yongu (published April 30, 2014). According to a thesis included in this quarter’s issue (entitled “The Creation of High-Tech Development Zone is Necessary Step in the Knowledge Economy Era”), “Using high-tech development zones as a model, the establishment of a high-tech industry and the shifting of the entire economy towards a knowledge economy is both a Party initiative and legal demands to the construction of a knowledge economy.”

Alongside the national goals of becoming both an economic superpower as well as an athletically powerful nation, the Kim Jong Un regime has also established the national goal of becoming a leader among knowledge economy countries. In order to establish a foothold for building the country’s knowledge economy, the regime has proposed the construction of high-tech development zones.

After attracting foreign investments to fund economic development zones (EDZ) last year, North Korea has begun pushing forward for the construction of a high-tech development zone in the city of Pyongsong, located in South Pyongan province. The high-tech development zone will be built in the same area as the Unjong Science and Technology Zone and will share a similar locale with the National Academy of Sciences, both of which are located in the South Pyongan Province.

According to the thesis, high-tech development zones will “act as regional bases that bring technology and production closer together, unifying the research-development-production-export process.” The thesis also explains the characteristics of the high-tech development zone, calling it a “new type of development region with a high concentration of information, technology, and talented individuals” and “a place where education, scientific research, and production are brought together to become one.”

Furthermore, the thesis continues, “Through the improvement of the high-tech development zone, existing businesses have begun to change to information-related businesses,” and noted that, “Just as the foundation of the high-tech development zone is important to the construction of a powerful knowledge economy, it is also important to provide support from the state and the Party.”

North Korea is currently pressing for construction of a type of cooperative complex to be built in the high-tech development zone where research and development, as well as production itself can take place in order to produce technologically-intensive products with high added value. However, due to sanctions imposed by the international community, North Korea is unable to acquire the advanced machinery it needs to construct the high-tech zone, and for now has only drawn out a rough sketch of the framework.

On the other hand, North Korea has also spurred progress in light industry in other regions by rewarding exemplary factories. This is seen as an attempt to increase the standard of living for the locals living in those regions, who have taken it upon themselves to improve light industry to best suit their situations.

Companies in Hoeryong, North Hamgyong Province, Wonsan, Kangwon Province, Chinchon [?], Chagang Province, and other regions have become recognized in North Korean media for their “innovations.” In Hoeryong, a chemical commodities factory developed fuel additives for lignite that increase its burning ability and efficiency, and was commended for its contribution in solving its citizens’ fuel problems. Other factories that were chosen to receive rewards include a glass bottle factory in Wonsan, and a wooden commodities factory in Chinchon[?] for increasing the production quality of their respective goods.

In a situation where the central authorities are in a vulnerable situation financially, North Korea has been encouraging regional businesses to grow and develop on their own. This not only increases the standard of living for the people, but encourages balanced regional development as well. Another thesis appearing in the most recent issue of Kyongje Yongu argues, “The comprehensive development of the regional economies has greatly reduced the state’s burden by allowing households to take it upon themselves to meet their needs according to their own situation.

Furthermore, regarding the growth of regional light industry, the thesis says, “general consumer goods are now being mass-produced, and are able to fulfill the region’s supply and demand needs,” emphasizing the use of “small quantity batch production.” Other light industry factories are also being built across the nation as part of the efforts to revitalize North Korea’s local economies.

Recently, construction of the Haeju Unjong Beer Factory was finished. Operations have commenced in Southern Hwanghae Province, and construction of the Musanryong Spring Water Factory was completed in late 2013. While North Korea’s plan to develop its local economies is not exactly breaking news, advances are slowly being made toward achieving the Kim Jong Un regime’s national goals.

* NKeconWatch: I have no idea why this article references a place in Jagang Province called “Chinchon”. Maybe they mean Huichon?

The Choson Sinbo, a Japan-based pro-North Korean newspaper, reported on April 2, 2014 that since March of last year all production facilities across North Korea have begun to take measures that will allow them to operate more autonomously. The article is currently garnering attention due to its explanation of the changes and improvements to economic management and by introducing factories where these measures have been successful.

The news also reported that North Korean factories have to diverge from the national economic plan and produce and sell products at their own discretion. Furthermore, workers’ compensation and benefits packages are being adjusted according to each individual factory’s economic situation.

One year after the implementation of the economic management improvement measures, the concept of “business know-how” has begun to settle in each factory. Factories that have been achieving successful results all share similar developments in worker enthusiasm, sense of responsibility, originality and creativity. Promoting the growth of these qualities in factory workers became the key to the successful economic management and growth during this period.

Specifically, the newspaper reported that the North Korean factory workers are seeing returns on their increased profits, and that their enthusiasm is the driving force of the nation’s economic growth.

In the article, Pyongyang Electric Cable Factory 326 was introduced as the first factory to be labeled as a “leading unit” and is considered as an ideal factory workplace for many job seekers in Pyongyang.

At this factory, monthly wages have steadily risen in increments that allow workers to meet the rising costs of living and maintain healthy lives. Workers at Pyongyang Electric Cable Factory 326 are now earning dozens of times more than the national average every month, and the highest record for wages soaring to over 100 times the average was observed this past year.

Alongside slogans and posters that inspire the workers’ will to work, competition charts are also posted at various locations around the factory. This has created a sort of “Socialist production competition.” Factories that submit detailed reports of their business performance receive gifts, and the unit that receives first place is rewarded with a special congratulatory dinner.

Another reason why job seekers are choosing this factory as their ideal workplace is because of housing security. Factory 326 solves its workers’ housing problems by constructing residence complex for the employees and workers become eligible to receive housing after working three to four years.

According to the article, the recent measures taken to improve economic management have been effective in creating a sense of attachment between worker and factory and increasing workers’ desire to succeed. This, combined with the introduction of new scientific technology has allowed factories across North Korea to attain a 10 percent increase in production over the last year. While overall production has in fact increased, it can be concluded that the boost to worker morale is the biggest and most important part of the changes seen in the economy since the implementation of the management improvement measures.

On March 31 of last year, the Central Committee of the Workers’ Party of Korea held a plenary meeting where the “Byungjin line” or parallel policy that supports both economic and nuclear development, was adopted, and where Pak Pong Ju was elected to the Politburo — and later Premier (formerly First Deputy Director of the Central Committee of the Workers’ Party) — in an unprecedented move. From this point forward, North Korea began to officially advance its plans for economic management measures.

This spring has brought a noticeable increase in the number of North Korean factories and enterprises leasing out parcels of farmland to private individuals, it has emerged.

A source from North Pyongan Province reported the news to Daily NK on the 21st. She explained, “The trend recently has been towards factories leasing out parcels of their farmland. On average they agree to divide up production 70/30, but in cases where lessees have already shown the ability to generate good returns on their own private plots it can be as high as 50/50.”

North Korean factories and firms use land given to them by the state to grow supplementary foodstuffs for employees, such as vegetables for use in side dishes like kimchi. Large ones have dedicated units that manage their farmland full-time, while smaller ones do so on an ad hoc basis.

The lease agreements are being concluded according to not only the capacity of the farmer to generate returns, but also upon which side is to provide inputs such as vinyl coverings and fertilizer, the source went on to reveal. If the majority of the inputs are to come from the factory then the harvest is likely to be divided 70/30 in favor of the factory. If the farmer is making the majority of the investment personally, the division can be as high as 50/50.

“Obviously, anyone who has money is going to prefer a 50/50 split, and people who don’t are going to get 70/30,” the source said. “Factories generally like the 50/50 split more because it means they do not to have to concern themselves with the farming process itself.”

Lessees are in some cases able to secure access to farmland via bribery or human networking, but the source emphasized that the ability to generate a good harvest is what usually matters. “We’ve had private farm plots here for the better part of 20 years now,” she pointed out, “so we know very well who has lots of farming experience and who is hard-working.”

Sources explain that people who are officially registered as members of cooperative farms cannot farm land owned by factories in this way. In general, the ones taking out the leases are either factory workers who know how to farm effectively, or failed traders who have turned to farming other people’s private plots for them.

Importantly, the leasing of land in this way appears to have become official policy. This marks a shift in approach: although cases of similar deals between factories and private individuals started to appear at the beginning of the 2000s, these were illegal which limited their spread. Conversely, the authorities have been focusing heavily on improving the efficiency of the agricultural system for the last 2-3 years, and instances of land rental are now more widespread than ever before.

In an interview with the pro-North Korea publication Choson Sinbo last May, Kim Myong Ho, a 52-year old director in the North Korean Ministry of Light Industry, explained that the government had decided to grant factory and enterprise managers greater authority in order to improve industrial production.

Authority over land owned by individual factories and enterprises rests with factory managers, who decree what is grown, in what quantities, and by whom. Therefore, in the event that managers stipulate that their land is being leased in order to increase production, the leases are acceptable to the state.

“The state directive was that we have to improve production and the management of state firms,” the source commented. “They don’t mind whether this is done by farming the land directly or by leasing it to other people to farm.”

Read the full story here:
Farm Deals Abound as State Pushes for ProductionDaily NK
2014-3-22